1. Report on Comprehensive Social Security System 26 August 2004

2. Outline of Presentation  Introduction  Overview of decisions taken by government  Framework for social security system  Extension of child support grant  Disability grants  Establishment of social security Agency  Strategic issues under consideration  Progress on Social Security Agency  Introduction  Overview of decisions taken by government  Framework for social security system  Extension of child support grant  Disability grants  Establishment of social security Agency  Strategic issues under consideration  Progress on Social Security Agency

3. Introduction  Government has prioritized the development of policy on comprehensive social protection to address weaknesses in the current system. These weaknesses include:  Fragmentation of current provisioning  Gaps and inconsistencies  Integrity of the system- poor application of rules, fraud and corruption  Appointed the Taylor Committee to review the entire system and make recommedations

4. Government decisions  Government approved a framework for social protection to include the following pillars:  Pillar 1 focuses on the basic social “endowment” that all citizens and a class of permanent residents, must have.  Pillar 2 involves contributions to essential social security over-and-above Pillar 1.  Pillar 3involves social security-type benefits that are more discretionary in nature.

5. Pillar 1: The Coverage  The most significant component of Pillar 1, the basic social endowment, is the income support of social assistance  Through social assistance, government provides income support to over:  2,1 million old age pensioners and war veterans  1,3 million disabled adults  140 000 foster care children  90 000 care dependent children  5,7 million child support grants  Budget projected to be in access of R55 billion this year, rising to R60 billion during the MTEF period  It is a significant intervention and deemed the most effective poverty alleviation programme of government, with

6. Government decisions (cont.)  Extension of Child Support Grant  Approved the phased extension of the child support grant to children under the age of fourteen  Approved roll out of Child Support Grant to 9 year olds for 2003/4  Approved the roll out of Child Support Grant to 10-year olds for 2004/5  In the medium term the programme will roll-out to include 11-13 year olds  Issues:  This intiative must be complemented by a campaign for partenal responsibility  Focus on the elimination fraud, perverse incentives

7. Government decisions (cont.)  Approved the establishment of Social Security agency  Parliament has finalised the enabling legislation  Implementation team appointed  Agency phase roll-out to begin March 2005  In the next 3 years the Agency will have taken over the functions  Issues:  Finalisation the welfare service model for functions left in the Department  Role of the provinces

8. Government decisions (cont.)  Disability Grants  agreed on criteria for assessing disability  Finalising the assessment tool  The tool will be functional by the next financial year  Issues:  Massive increase in disability grants  Utilisation of the tool to clean up the system  Uniformity in the application of the tool across the provinces.

9. Strategic issues under consideration  Social Health Insurance  Discussions are under way, complexities mean there is further work that needs to be done  A discussion document will be tabled at the 2005 January Lekgotla  Issues:  Impact at a macro-economic level  Differentiate between NHI and SHI

10. Strategic issues under consideration (cont.)  Road Accident Fund  Integration of RAF with the broader social security system  Draft bill forwarded to Parliament  Comprehensive review of implications for social security integration  Issues:  Campaign to reduce road accidents

11. Further investigation  Anecdotal evidence suggests there are unintended consequences to social assistance  A comprehensive study is being undertaken to investigate:  Perverse effects of food distribution programme – implications of weaning households from the programme without a sustainable mode of earning a living  Probability of social policy defeating the ends of economic policy unintentionally  Transport costs being higher than costs of not working

12. Social Security Agency The Agency seeks to address key weaknesses in the current social security system. These weaknesses are the following: –Fragmented institutional arrangements and a lack of uniformity; –Inefficient processes and high costs; –Budgetary and financial pressures at provincial level; –Fraud and corruption; and –The poor quality of service delivery.

13. Social security agency (cont.) By April 2005 the Agency should be able begin to take up its legislative mandate Over the next three years the Agency should establish a National Head Office with provincial, regional and local structures The National Department of Social Development as service assuror will be responsible for policy development, setting norms and standards for service delivery and monitoring and evaluation; The Inspectorate will be responsible for ensuring that the integrity of the social grants system is not compromised through fraud and mismanagement.

14. Social Security Agency (cont.) The Agency will improve service delivery by ensuring that: –Competent frontline staffs process applications inline with norms and standards, reducing application processing time significantly; –Approval of applications will be at the point of delivery; –Skilled back office staff will ensure verification and approval within a reduced period by using enabling technologies (case management, workflow systems & interfaces to other government data sources

15. Social security Agency (cont.) The shifting of the social assistance function to national should alleviate the provincial budgetary/ financial pressures and crowding out of other provincial priorities caused by demand for social grants.Provincial Departments will be able to focus better on social services and expand their service delivery. The Provinces will play an important role through political oversight.

16. Conclusion  Policy on comprehensive basic social protection to be finalised by end of this financial year.  To include both money wage and social wage.  Policy framework dealing with integration of pillar 2 will be finalised by end of this year.  To include consideration of RAF, SHI/NHI, Retirement and UIF  Government finalizing research on poverty measurement to inform policy.